How to obtain a Portugal residence permit under the investment fund option?

Participating in an investment fund is one of the remaining options for investors to apply for the Portugal Golden Visa.

An investment fund is generally a pool of money collected from multiple participants to invest in various projects for profit. The pool is overseen by a managing company that decides where the funds will be allocated, depending on their strategy and field of expertise and the level of risk set by the investors.

To be eligible for the Portugal Golden Visa program by investing in fund units, the minimum investment is €500,000. The funds can accept lower investments, but they will not serve the purposes of the Golden Visa program in that case.

All potential Portugal Golden Visa applicants willing to take the investment fund route must meet the following requirements:

• be a non-EU, non-EEA and non-Swiss citizen;

• be over 18 years old;

• have a clean criminal record;

• have no socially dangerous diseases;

• have medical insurance with full coverage.

Some investment funds may have extra requirements for the applicants:

• have a certain level of knowledge about financial instruments, such as company stock, government bonds, funds, etc.;

• proof of substantial legal funds for investment.

The main applicant can include the following family members in the application for a residence permit by investment:

• spouse or legal partner;

• children under 18 years of age;

• children over 18 years of age who are single, financially dependent on the investor and enrolled as full-time students;

• parents of the investor and their spouse. If they are under 65 years old, they must be financially dependent on the investor.

1. Diversification. Applicants are allowed to divide their €500,000 investment into several funds. Besides, the funds themselves are regulated to have a certain level of diversification in their strategy. It helps mitigate risks for the participating investors.

2. Safety. All the investment funds approved for the Portugal Golden Visa program are regulated by the Portuguese Securities Market Commission (CMVM) and by the country’s Central Bank. The rules stipulate that the Portuguese Tax and Customs Authority regularly audits fund managers. Such a high level of control ensures that all the funds must comply with the country’s laws.

3. Tax optimisation. The investor does not need to pay dividends and capital gains tax if they don’t become a tax resident in Portugal after obtaining a residence permit.

4. The potential of high return. The annual yields from the investment funds can be higher than income from other forms of investment eligible for the Portugal Golden Visa. Most investment funds qualified for the program target an annual internal return rate (IRR) of 10—20%.

5. Professional management. After investing the money into fund units, the Portugal Golden Visa applicant allows a team of experts to manage all the transactions until the time comes to exit the fund.

Investment funds was an increasingly popular choice for Portugal Golden Visa applicants even before the law changes

1. Risks. Investors who choose the investment fund as their option to obtain a Portugal Golden Visa are not guaranteed profit from their participation in it. While the fund manager is motivated to get a profit and earn their commission, investors alone bear the consequences if the value of their investment fund units depreciates by the time of their exit.

2. Lack of control. While some investors may be happy to allow a third party to manage their investment, it can be uncomfortable for others who prefer to keep their funds under full control. Ultimately, it comes down to trust between the investor and their fund manager.

3. Sharing profits. Any potential yields will be divided between the investors and the fund managers who take their commission. It can vary between funds but is normally at over 5% of all the profit generated by investment. Besides, most funds charge a subscription fee and an annual management fee.

4. Exit issues. Most investment funds contractually ensure the participants that the fund will not be dissolved before a certain period. Usually, it extends beyond five years, when the Portugal Golden Visa holders can obtain permanent residency in the country or its citizenship.

The investors’ funds are tied until the fund dissolves, making the fund units' resale very difficult. Funds can also trigger extension periods without consulting the investors.

5. KYC requirements. Know Your Client is a standard practice in the investment and financial services industry, suggesting that investors present documents confirming the income, source, and legality.

After the changes to the Portugal Golden Visa program, real estate purchase is no longer an option for the applicants.

Investment funds that are directly or indirectly related to real estate are also not eligible for those who want to obtain Portugal residency by investment. However, there are plenty of investment funds specialising in other fields, including technology, agriculture, and environment (ESG).

All the funds listed below are certified by the Portuguese Securities Market Commission, known in Portuguese as Comissao do Mercado de Valores Mobiliários (CMVM).

In case of open-ended investment funds, the investor can make an exit at any moment without barriers. However, to qualify for the Portugal Golden Visa, they must maintain a holding period of five years.

Any investor willing to participate in the Portugal Golden Visa program must submit a minimal set of documents:

• passport and its copy;

• bank statements confirming substantial funds;

• proof of tax identification number in your country of origin or residence;

• proof of medical insurance;

• clean criminal record certificate;

• declaration of honour to confirm the intention to maintain investment for at least 5 years.

Real estate purchase and capital transfer are not viable option for Golden Visa applicants since October 2023, making investment funds the most popular remaining alternative

1. An investor can become a Portugal resident by contributing to an investment fund qualified for the Portugal Golden Visa program.

2. The minimum investment is €500,000, which can be spread across several investment funds. Receiving Portugal permanent residency or citizenship takes five years after obtaining the Golden Visa, but the investment will likely be tied to the funds for a few more years.

3. Purchasing investment fund units is a high-risk, high-reward option. The investor can earn a more significant profit from it than if another investment option is chosen, but there’s also a likelihood that the investment value will depreciate.

4. A Portugal Golden Visa-qualified investment fund cannot specialise in real estate. However, they can invest in agricultural, environmental or other types of projects to be a Portugal Golden Visa option.

5. The Portugal Golden Visa allows the investor to reside in Portugal and obtain the country’s citizenship in 5 years.